New is a boo boo
When you can buy a new car for less than R65 000 (Star bakkies, made in China), it makes sense to buy new doesn’t it? Actually, it doesn’t. If you think second hand is only for the poor, you’re wrong again. A lot of the wealthiest people know how much money is wasted in buying a brand new car. The bright buyer buys a vehicle that is technically new, but officially secondhand.
I’m not knocking Star cars – I’ve never even seen one. I am looking to buy a new car, and the reason to avoid the new brands has got little to do with the performance or quality of the cars or carmakers. It has everything to do with resale value, and important: after sales service.
A new car is one of the worst investments you can make. Within a year the value of a car can drop by half. That means if you want to sell your Star 12 months down the line, you might have difficulty getting more than R40 000 for it. Many people aren’t interested in resale value, after all, they see the car as something to move them around for the next decade or two. Fair enough. But if you’re driving a Chevy Spark or a Kia Picanto or a Citroen or a Fiat Panda or anything else reasonably priced (and reasonably exotic) you can expect to part with an arm and a leg for replacement parts. These models may do okay for the first 100 000 kilometres, but woe betide the driver who goes into the unknown territory beyond, or worse, if you’re unluckily or dumb enough to ever prang your new ride.
I interviewed a chap called Ben who does this for a living and he quoted bone chilling prices for replacing anything other than Toyota, Nissan, VW and other breeds well known in South Africa.
Since the resale value is so low, why not buy a car that is almost new? My sister did. These are called demos, and their prices are slashed by up to R6000 just because they’ve driven out of the showroom once or twice. Often they have less than 100 kilometres on their clocks. Another option is to buy a car that’s been used by a car rental agency (but make sure they are fitted with airbags). These have a nominal amount of kilometers (no more than 40 - 50 000) and otherwise ought to be in pristine condition.
If you’re still not convinced, consider the danger of forking out R7000 and then having your less than R1000 repayments increase along with the interest rates. Because of the Rand’s weakness against the dollar, we can expect not only higher interest rates, but another petrol price hike (about 24 c). Today the price of oil is above $70, and it’s hard to imagine inflation is not going to start clobbering the global economy starting sometime in the remainder of this year.
So what to do? Play it safe. Save as much as you can for as long as you can, and then buy something as new (but not brand new) as possible. Try to buy something made no earlier than 2000 (if you can afford to, and can stand to save that long) to insure that it’s fuel efficient and is likely to last until oil runs out. Put an ad in the classifieds that goes something like this:
Wanted to buy: Newish second hand vehicle, especially Toyota (one of the usual suspects). Have X to spend, or nearest offer. Call Smart Aleck at 075 4321 098.
Looking intelligent while driving is another kettle of fish, but at least you won’t be struggling with debt longer than you need to be. One more tip: when you insure your rocket ship, consider Hollard’s latest package. It’s called Pay-As-You-Drive. The less you drive, the less you pay. Makes sense, doesn’t it?
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